Peer comparison is generally considered to be a good way of judging the worth of most things. But what if they are the only one of their kind? Well, there are ways of evaluating them too. ET Intelligence Group shows you how it is done for India Inc's lone stars.

To know if you are paying the right price for a stock, comparing its valuations with other stocks of a similar kind is generally the way to begin.

For example, to know if a banking stock like Axis Bank is rightly priced, you would tend to compare it with the valuations commanded by HDFC Bank or ICICI Bank. But what if there is no other listed entity for an investor to compare with?

In such cases, one can either look at the historical valuations of the company or if it is a newly-listed company, compare its valuations with its international peers who have similar operations.

However, while doing so, the investor must keep in mind the different growth trajectories the companies in different markets would have.

For example, a consumption stock in an emerging market would naturally command higher valuations than its peer in the developed economy owing to the more promising growth prospects in the emerging market.

ET Intelligence Group this week analyses a bouquet of such companies that do not have any listed peer to compare with. For example, Coal India, which has a monopoly in coal mining; MCX — India's first commodities exchange to get listed and Talwalkars Better Value Fitness — India's leading health and fitness company.

It is not that these companies do not face any competition in their respective markets with the exception of Coal India. It is just that they do not have any listed entity to benchmark against.

One interesting company that didn't feature in our list was Delta Corp. Though it was the only listed company that runs casinos, this business formed only one-fourth of its revenues.

Coal India

The state-run Coal India is the only company in India that is allowed to mine and sell coal for purposes other than captive use and therefore faces no competition.

With reserves of 67 billion tonne, it is the largest coal-producing company in the world. As of March 2012, its annual production stood at 436 million tonne. It expects to increase production by 6% to 464 million tonne by the end of the current fiscal year, which appears achievable though it has been missing production targets over the past three years.

It has a strong balance sheet with low debt and a cash pile of Rs58,200 crore as on March 2012. The company's production and offtake improved during the March 2012 quarter as reflected in the 29% increase in sales over the year-ago period.

But profitability was impacted by a steep rise in the wage bill which resulted in a 5% decline in net profit. High wage cost will remain a concern for the company over the coming quarters as well. There are several companies that operate in the coal mining business, the largest being BHP Billiton and Rio Tinto.

But because of the massive scale of their operations, the valuations of these companies are not comparable with Coal India. A better comparison would be with China Coal Energy or Shanxi Coal International Energy Group Company.

In rupee terms, the Chinese coal miners earned revenues of 644 billion and 604 billion, respectively, in the trailing 12 months (TTM). This is compared with Coal India's TTM revenue of Rs624 billion. China Coal trades at a PE of 7.45 times and has a market capitalisation which is 1.13 times its sales.

Shanxi Coal trades at a PE of 16.6 times and has a market capitalisation which is 0.3 times its sales. The stock of Coal India has fallen 13% in the past 12 months. It currently trades at a PE of 14 times which is at par with its Chinese peers.

While its market cap to sales ratio of 3.48 times could make the stock seem expensive, it is important to note that coal prices in India are significantly lower than those in China.

MCX

MCX, which commenced operations in 2003, is India's only listed commodity exchange and is a demutualised entity —marked by a separation of ownership, management and trading membership.

The exchange currently allows trading in 49 commodity futures from bullion, metals, energy and agriculture. Its unlisted peers in India include NCDEX, Indian Commodity Exchange (ICEX), National Spot Exchange, Ace Derivatives and Commodity Exchange, NMCE, Indian Energy Exchange (IEX) etc.

MCX claims that it has the world's highest turnover in silver contracts, the second largest in gold and third largest in crude oil and copper. The average daily turnover at MCX is now close to Rs51,400 crore. It has grown over 3.5 times in the last three years.